Three essays on income growth, poverty and inequality

Abstract

This dissertation focuses mainly on the measurement of poverty and inequalities within and between the subgroups in a society. It consists of three manuscripts, which study poverty and inequality from three different aspects. Discussing on poverty measurement, estimating gender and regional disparity of poverty, and estimating growth elasticities for Iran are the issues, which are investigated in this project. We started with discussing on poverty measurement. Since measuring individual welfare (or individual deprivation) is the basic input to all inequality and poverty analysis, discussing over the best method of measuring deprivation is an important debate in the welfare, poverty and inequality discourse. We estimated traditional income poverty and multidimensional poverty, compared the results over the time, and demonstrated the advantages of each approach. Then we continued our discussion by focusing on inequalities in welfare distribution. We tried to show how subgroups or individuals are marginalized by their demographic and spatial circumstances. By conducting multilevel regression, we tried to detect extend of the inequality in distribution of welfare, which related to the different level of data. Moreover, we predicted the possibility of falling in poverty for a typical household with certain circumstances and in each spatial situation. Finally, we focused on discussing the sensitivity of monetary and non-monetary deprivations to income growth and income inequality. The discussion over the elasticity of poverty in respect of economic growth is a very important issue in the pro-poor growth discourse and in the welfare, poverty and inequality literature. We made our contribution to the relevant literature by investigating the sensitivity of non-monetary deprivations as well as monetary deprivations to income growth.Moreover, in this work the empirical results of our case study, Iran, lead us to depict a novel image of welfare and poverty issue in the country. We investigated significant differences in poverty value as well as the pace of poverty reduction between rural and urban areas, which causes an expanding welfare gap between different regions over the time. We also, by decomposing adjusted multidimensional poverty, showed that reaching minimum daily food expenditure has the most contribution in poverty, specially, in Tehran and other urban areas, although the contribution of the expenditure dimension decreased over the time. In rural areas, the contribution of living standard deprivation such as deprivation in accessing safe water and electricity is as important as the contribution of education deprivation or nutrition deprivation.We also found out the significant disparity between provinces of Iran in respect of welfare distribution, whereas welfare tends to concentrate in capital province (Tehran) and in some of its neighbor provinces in the center and north of Iran. While the most disparity of poverty lied down within provinces, having female, aged, divorced or widow head, as well as being rural are characteristics, which increase the likelihood of falling in poverty for a household.Finally, we investigated a weak income growth elasticity of poverty that becomes even weaker by upper poverty threshold, while income inequality of poverty is strong and more significant. We found out the similar results for growth elasticity of non-monetary deprivations and multidimensional poverty. In fact, high income inequality diminished the positive effect of income growth and this effect is even stronger for a lower poverty line and for the non-monetary deprivations, as well as multidimensional poverty. That implies the significant effect of changes of income inequality, particularly, on extreme and chronic poverty. In this dissertation, we have tried to highlight different aspects of welfare, poverty and inequality issue in a way that can be useful for policymaking. In fact, we believe depicting a clear and vast image of welfare, poverty and inequality situation in the country of Iran helps for tailoring better policies in the matter of poverty diminishing or welfare enhancement.